In the course of my career at Gartner, and my pre-Gartner life as an engineering director who spent giant piles of money on purchasing technology that was often very early-stage, I have spoken to an awful lot of customer references. I’m about to soon dive into the reference-a-thon that a Magic Quadrant represents (we call as many as 5 references per vendor), and it’s leading me to think about what makes for a good or a bad reference, from my personal perspective. So, here are some thoughts, targeted at vendors and service providers.
Make sure your references like you. Nothing will create a worse impression than a reference that isn’t happy with you, and hasn’t been happy with you for some time. It’s fine for a reference to currently be having a transient problem, or even to have experienced some kind of disaster — that sometimes even makes for good stories about how good your support has been during the crisis. But a reference that isn’t a promoter is hugely problematic, because not only does it create a negative impression, it makes it clear that you have failed to keep track of this customer’s sentiment, and to communicate internally about it, to the point where you’re using an unhappy customer as a key reference. You should get in touch with your references on a regular basis to make sure they’re still delighted with you.
Your references should be engaged customers. Engaged customers know why they chose you (and can talk about the competition they looked at and why your solution was the best fit for them), have an opinion on their ongoing use of your product and service, and are passionate enough about it to talk about the good and the bad, what you do well and what they’d like you to improve. Customers who are just, yeah, we selected these guys and it all works okay — fine, you’ve checked the box on “you haven’t actively sucked”, but they’ve really said nothing interesting. This can be fine if you’re just offering a reference to a prospective customer (who wants to make sure that you’ve done an implementation similar to the one he’s contemplating and that it went fine), but it’s deadly in an analyst reference (because the analyst is interested in getting a first-hand picture of what it’s like to deal with you and your product/service, and someone who is neither enthused nor analytical makes for a deathly-dull and not very useful reference).
Your references should be targeted. If you are offering a reference customer to a prospect, the reference should be as similar to that prospect as possible, in terms of solution, industry, approach, and role (likely in that order). If you are offering references to an analyst, they should represent a spread of customers — different use cases, industries, and length of time they’ve been customers (from new implementations to long-term customers).
Your references should be representative. If you’re dealing with an individual customer, your references should be as close to that customer’s expected implementation as possible, even if that is exotic. But if you’re dealing with an analyst, the references should be representative of typical use cases, implementations, and customer types. If you choose to offer some more exotic outliers, great, but make sure the analyst knows that they’re not typical of your customer base. You don’t want to give the analyst the wrong impression about who you normally serve.
Your reference list should be periodically refreshed. You want references that are still actively engaged with you, and represent the current state of your business, in terms of version deployed, use case, and experience with your company. While long-term customers are sometimes nice to talk to (especially in a space where customers sign very long contracts, like 7-year outsourcing deals), for products, or for services bought on shorter contracts, current references are very important. If you are offering references to an analyst, especially in the context of a yearly process like a Magic Quadrant, do not repeat references from year to year; not only will the analyst prefer to talk to someone new, but he will wonder why you can’t easily produce new reference customers.
Ignore client relationships with analyst firms. When offering references to analysts, don’t worry about whether or not a reference has a client relationship with their firm. Reference interviews are typically conducted under NDA, and as far as I know across all research firms, without any regard to client status. Even if an analyst helped a client through the process that resulted in your being selected, he might not have gotten any feedback from the client about what has happened since. Even if the analyst has an ongoing relationship with that client, it’s usually in the context of inquiry, where the analyst, constrained by the 30-minute timeslot and the client’s specific questions, rarely gets to satisfy his curiosity. Reference interviews are very different, and the analyst conducting the interview might not be the same one as previously helped the client.
Consider supplementing references with a customer list. A list of customer logos and, if possible, a one-sentence description of their use case, can be extremely helpful for getting a better general understanding of who you serve, and what they use you for. If providing this list to an analyst, it can usually be done under an NDA.
I originally started writing this blog post before Forrester’s James Staten made a post called “Public Clouds Prove I&O Pros Are From Venus And Developers Are From Mars“, and reading made me change this post into a response to his, as well as covering the original point I wanted to make.
In his post, James argues that cloud IaaS offerings are generally either developer-centric or I&O-centric, which leads to an emphasis on either self-service or managed services, with different feature-set priorities. Broadly speaking, I don’t disagree with him, but I think there’s a crucial point that he’s missing (or at least doesn’t mention), that is critical for cloud IaaS providers to understand.
Namely, it’s this: Developers are the face of business buyers.
We can all agree, I’m sure, that self-service cloud IaaS of the Amazon variety has truly empowered developers at start-ups and small businesses, who previously didn’t have immediate access to cheap infrastructure. Sometimes these developers are simply using IaaS as a substitute for having to get hardware and colocation. Sometimes they’re taking advantage of the unique capabilities exposed by programmatic access to infrastructure. Sometimes they’re just writing simple Web apps the same way they always have. Sometimes they’re writing truly cloud-native applications. Sometimes they really need to match their capacity to their highly-variable needs. Sometimes they have steady-state infrastructure. You can’t generalize about them too broadly. But their reasons for using the cloud are pretty clear.
But what’s driving developers in well-established businesses, with IT Operations organizations that have virtualized infrastructure and maybe even private cloud, to put stuff in the public cloud?
It’s simple. They’ve asked for something and IT Operations can’t give it to them in the timeframe that they need. Or IT Operations is such a pain to deal with that they don’t even want to ask. (Yes, sometimes, they want programmatic infrastructure, have highly variable capacity needs, etc. Then they think like start-ups. But this is a tiny, tiny percentage of projects in traditional businesses, and even a small percentage of those that use cloud IaaS.)
And why do they want something? Well, it’s because the business has asked the applications development group to develop a thingy that does X, and the developer is trotting off to try to write X, only he can’t actually do that until IT Operations can give him a server on which to do X, and possibly some other stuff as well, like a load balancer.
So what happens is you get a developer who goes back to a business manager and says, “Well, I could deliver you the code for X in six weeks, except IT Operations tells me that they can’t get around to giving me a server for it for another three weeks.” (In some organizations, especially ones without effective virtualization, that can be months.) The business manager says, “That’s unacceptable. We can’t wait that long.” And the developer sighs and says, “Don’t worry about it. I’ll just take care of it.” And then some cloud IaaS provider, probably one who’s able to offer infrastructure, right now, gets a brand-new customer. This is what businesses mean when they talk about “agility” from the cloud.
Maybe the business has had this happen enough that Enterprise Architecture has led the evaluation of cloud IaaS providers, chosen one or more, set down guideliens for their use, and led the signing of some sort of master services agreement with those providers. Or maybe this is the first sign-up. Either way, developers are key to the decision-making.
When it comes to go into production, maybe IT Operations has its act together, and it comes back into the business’s data center. Maybe it has to move to another external provider — IT Operations has sourced something, or Enterprise Architecture has set a policy for where particular production workloads must run. So maybe it goes to traditional managed hosting, hybrid hosting, or a different cloud provider. Maybe it stays with the cloud the developer chose, though. There’s a lot to be said for incumbency.
But the key thing is this: In SaaS, business buyers are bypassing IT to get their own business needs met. In IaaS, business buyers are doing the same thing — it’s just that it’s the developer that is fronting the sourcing, and is therefore making the decision of when to go cloud and who to use when they do, at least initially.
So if you’re a cloud provider and you say, “We don’t serve individual developers” (which, in my experience, you’ll generally say with a sneer), you are basically saying, “We don’t care about the business buyer.” Which is a perfect valid sales strategy, but you should keep in mind that the business controls two-thirds of cloud spending (so IT Operations holds the purse-strings only a third of the time), according to Gartner’s surveys. You like money, don’t you?
There are many, many more nuances to this, of course (nuances to be explored in a research note for Gartner clients, naturally, because there’s only so much you get for free). But it leads to the conclusion that you must be able to sell to both developers and IT Operations, regardless of the nature of your offering, unless you really want to limit your market opportunity. And that means that the roadmaps of leading providers will be convergent to deliver the features needed by both constituencies.
We’re currently in the midst of agenda planning for 2012, which is a fancy way to say that we’re trying to figure out what we’re going to write next year. Probably to the despair of my managers, I am almost totally a spontaneous writer, who sits down on a plane and happens to write a research note on whatever it is that’s occurred to me at the moment. So I’ve been pondering what to write, and decided that I ought to tap into the deep well of frustration I’ve been feeling about the cloud IaaS market over the last couple of months.
Specifically, it started me in on thinking about the most common fallacies that I hear from current cloud IaaS providers, or from vendors who are working on getting into the business. I think each of these things is worthy of a research note (in some cases, I’ve already written one), but they’re also worth a blog post series, because I have the occasional desire to explode in frustrated rants. Also, when I write research, it’s carefully polite, thoughtfully-considered, heavily-nuanced, peer-reviewed documents that will run ten to twenty pages and be vaguely skimmed, often by mid-level folks in product marketing. If I write a blog post, it will be short and pointed and might actually get the point through to people, especially the executives who are more likely to read my blog than my research.
So, here’s the succinct list to be explored in further posts. These are things I have said to vendor clients in inquiries, in politely measured terms. These are the blunt versions:
Doing this cloud infrastructure thing is hard and expensive. Yes, I know that VMware told you that you could just get a VCE Vblock, put VMware’s cloud stack on it (maybe with a little help from VMware consulting), and be in business. That’s not the case. You will be making a huge number of engineering decisions (most of which can screw you in a variety of colorful ways, either immediately or down the road). You will be integrating a ton of tools and doing a bunch of software development yourself, if you want to have a vaguely competitive offering for anything other than the small business migrating from VPS. Ditto if you use Citrix (Cloud.com), OpenStack, or whomever. Even with professional services to help you. And once you have an offering, you will be in a giant competitive rat race where the best players innovate fast, and the capabilities gap widens, not closes. If you’re not up to it, white-label, resell, or broker instead.
There is more to the competition than Amazon, but ignore Amazon at your peril. Sure, Amazon is the market goliath, but if your differentiation is “we’re not like Amazon, we’re enterprise-class!”, you’re now competing against te dozens of other providers who also thought that would be a clever market differentiation. Not to mention that Amazon already serves the enterprise, and wants to deepen its inroads. (Where Amazon is hurting is the mid-market, but there’s tons of competition there, too.) Do you seriously think that Amazon isn’t going to start introducing service features targeted at the enterprise? They already have, and they’re continuing to do so.
Not everything has to be engineered to five nines of availability. Many businesses, especially those moving legacy workloads, need reliable, consistently high-performance infrastructure. Howeve, most businesses shouldn’t get infrastructure as one-size-fits-all — this is part of what is making internal data centers expensive. Instead, cloud infrastructure should be tiered — one management portal, one API, multiple levels of service at different price points. “Everything we do is enterprise-class” unfortunately implies “everything we do is expensive”.
Your contempt for the individual developer hugely limits your sales opportunities. Developers are the face of the business buyer. They are the way that cloud IaaS makes inroads into traditional businesses, including the largest enterprises. This is not just about start-ups or small businesses, or about the companies going DevOps.
Prospective customers will not call Sales when your website is useless. Your lack of useful information on your website doesn’t mean that eager prospects will call sales wanting to know what wonderful things you have. Instead, they will assume that you suck, and you don’t get the cloud, and you are hiding what you have because it’s not actually competitive, and they will move on to the dozens of other providers trying to sell cloud IaaS or who are pretending to do so. Also, engineers hate talking to salespeople. Blind RFPs are common in this market, but so is simply signing up with a provider that doesn’t make it painful to get their service.
Just because you don’t take online sign-ups doesn’t mean your cloud is “safe”. Even if you only take “legitimate businesses”, customers make mistakes and their infrastructure gets compromised. Sure, your security controls might ensure that the bad guys don’t compromise your other customers. But that doesn’t mean you won’t end up hosting command-and-control for a botnet, scammers, or spammers, inadvertently. Service providers who take credit card sign-ups are professionally paranoid about these things; buyers should beware providers who think “only real businesses like you can use our cloud” means no bad guys inside the walls.
Automation, not people, is the future. Okay, you’re more of a “managed services” kind of company, and self-service isn’t really your thing. Except “managed services” are, today, basically a codeword for “expensive manual labor”. The real future value of cloud IaaS is automating the heck out of most of the lower-end managed services. If you don’t get on that bandwagon soon, you are going to eventually stop being cost-competitive — not to mention that automation means consistency and likely higher quality. There’s a future in having people still, but not for things that are better done by computers.
Carriers won’t dominate the cloud. This opinion is controversial. Of course, carriers will be pretty significant players — especially since they’ve been buying up the leading independent cloud IaaS providers. But many other analyst firms, and certainly the carriers themselves, believe that the network, and the ability to offer an end-to-end service, will be a key differentiator that allows carriers to dominate this business. But that’s not what customers actually want. They want private networking from their carrier that connects them to their infrastructure — which they can get out of a carrier-neutral data center that is a “cloud hub”. Customers are better off going into a cloud hub with a colocated “cloud gateway” (with security, WAN optimization, etc.), cross-connecting to their various cloud providers (whether IaaS, PaaS, SaaS, etc.), and taking one private network connection home.
Stay tuned. More to come.
Most of us have long since overcome our fear of handing over our credit cards to Internet merchants. It’s become routine for most of us to simply do so. We buy stuff, we sign up for subscriptions, it’s just like handing over plastic anytime else. For that matter, most of us have never really thought about all that credit card data laying around in the hands of brick-and-mortar merchants with whom we do business, until the unfortunate times when that data gets mass-compromised.
Bad billing problems plague lots of organizations, but Electronic Arts (in the form of its Mythic Entertainment studio, which does the massively multiplayer online RPGs Dark Ages of Camelot and Warhammer Online) just had a major screw-up: a severe billing system error that, several days ago, repeatedly charged customers their subscription fees. Not just one extra charge, but, some users say, more than sixty. Worse still, the error reportedly affected not just current customers, but past customers. A month’s subscription is $15, but users can pre-pay for as much as a year. And these days, with credit cards so often actually being checking-account debit cards, that is often an immediate hit to the wallet. So you can imagine the impact on even users with decent bank balances, being hit by multiple charges. (Plenty of people with good-sized savings cushions only keep enough money in the checking account to cover expected bills, so you don’t have to be on the actual fiscal edge to get smacked with overdraft fees.) EA is scrambling to get this straightened out, of course, but this is every company’s worst billing nightmare, and it comes at a time when EA and its competitors are all scrambling to shift their business models online.
How many merchants that you don’t do business with any longer, but used to have recurring billing permission on your credit card, still have your credit card on file? As online commerce and micropayments proliferate, how many more merchants will store that data? (Or will PayPal, Apple’s storefronts, and other payment services rule the world?)
Everyone has vendor horror stories. No matter how good a vendor normally is, there will be times that they screw up. Some customers will exacerbate a vendor’s tendency to screw up — for instance, they may be someone the vendor really shouldn’t have tried to serve in the first place (heavy customization, i.e., many one-offs from a vendor who emphasizes standardization), or they may just be unlucky and have a sub-par employee on their account team.
Competitors of a vendor, especially small, less-well-known ones, will often loudly trumpet, as part of a briefing, how they won such-and-such a customer from some more prominent vendor, and how that vendor did something particularly horrible to that customer. I often find myself annoyed at such stories. It’s fine to say that you frequently win business away from X company. It’s great to explain your points of differentiation from your rivals. I’m deeply interested in who you think your most significant competitors are. But it’s declasse’ to tell me how much your competitors suck. Also, I can often hear the horror-story anomalies in those tales, as well as detect the real reason — like the desire to shift from a lightly-managed environment to a entirely managed one, or the desire to go from managed to nearly entirely self-managed, etc. I’ll often ask a vendor point-blank about that, and get an admission that this was what really drove the sale. So why not be honest about that in the first place? Say something positive about what you do well.
I think, for the most part, that it doesn’t work on prospective customers any better than it works on analysts. Most decent people recoil somewhat at hearing others put down, whether they are individuals or competing vendors. Prospects often ask me about badmouthing; naturally, they wonder what’s behind the horror stories, but they also wonder why the vendor feels the need to badmouth a competitor in the first place.
I often find that it’s not really the massive, boneheaded incidences that tend to drive churn, anyway. They can be the flash point that precipitates a departure, but far more often, churn is the result of the accumulation of a pile of things that the customer perceives as slights. The vendor has failed to generate competence and/or caring. While sincerity is not a substitute for competence, it can be a temporary salve for it; conversely, competence without conveying that the customer is valued can also be negatively perceived. Human beings, it seems, like to feel important.
Horror stories can be useful to illustrate these patterns of weakness for a particular vendor — a vendor that has trouble planning ahead, a vendor whose proposed customer architectures have a tendency not to scale well, a vendor with a broken service delivery structure, a vendor that doesn’t take accountability, and so on. Interestingly, above-and-beyond stories about vendors can cut both ways — they can illustrate service that is consistently good but is sometimes outstanding, but they can also illustrate exceptions to a vendor’s normal pattern of mediocre service.
As an analyst, I tend to pay the most attention to what customers say about their routine interactions with the vendor. Crisis management is also an important vendor skill, and I like to know how well a vendor responds in a crisis; similarly, the ramp up to getting a renewal is also an important skill. However, it’s the day-to-day stuff that tends to most color people’s perceptions of the relationship.
Still, we all like to tell stories. I’m always looking for a good case study, especially one that illustrates the things that went wrong as well as the things that went right.
A Fortune 1000 technology vendor installed a new IP phone system last year. There was one problem: By IT department policy, that company does not change any defaults associated with hardware or software purchased from a vendor. In this case, the IP phones defaulted to no ring tone. So the phone does not ring audibly when it gets a call. You can imagine just how useful that is. Stunningly, this remains the case months after the initial installation — the company would rather, say, miss customer calls, than change the Holy Defaults.
A software vendor was having an interesting difficulty with a larger customer. The vendor’s configuration file, as shipped with the software, has defaults set up for single-server operation. If you want to run multi-server for high availability or load distribution, you need to change some of the defaults in the configuration file. They encountered a customer with the same kind of “we do not change any defaults”. Unsurprisingly, their multi-server deployment was breaking. The vendor’s support explained what was wrong, explained how to fix it, and was confounded by the policy. This is one of the things a custom distribution from the vendor can be used for, of course, but it’s a head-slapping moment and a grotesque waste of everyone’s time.
Now I’m seeing cloud configurations confounding people who have these kinds of policies. What is “default” when you’re picking from drop-down menus? What do you do when the default selection is something other than what you actually need? And the big one: Will running software on cloud infrastructure necessitate violating virgin defaults?
As an analyst, I’m used to delivering carefully nuanced advice based on individual company situations, policies, and needs. But here’s one no-exceptions opinion: “We never ever change vendor defaults” is a universally stupid policy. It is particularly staggeringly dumb in the cloud world, where generally, if you can pick a configuration, it is a supported configuration. And bluntly, in the non-cloud world, configurable parameters are also just that — things that the vendor intends for you to be able to change. There are obviously ways to screw up your configuration, but those parameters are changeable for a reason. Moreover, if you are just using cloud infrastructure but regular software, you should expect that you may need to tune configuration parameters in order to get optimal performance on a shared virtualized environment that your users are accessing remotely (and you may want to change the security parameters, too).
Vendors: Be aware that some companies, even really big successful companies, sometimes have nonsensical, highly rigid policies regarding defaults. Consider the tradeoffs between defaults as a minimalistic set, and defaults as a common-configuration set. Consider offering multiple default “profiles”. Packaging up your software specifically for cloud deployment isn’t a bad idea, either (i.e., “virtual appliances”).
IT management: Your staff really isn’t so stupid that they’re not able to change any defaults without incurring catastrophic risks. If they are, it’s time for some different engineers, not needlessly ironclad policies.
When I first started this blog, I intended to write more about virtual worlds, following the general theme of massive scalability. In this instance, though, I want to muse upon the balance between maximizing your revenues, and adhering to principle, especially when you’re a public company with shareholders to worry about. Also, this involves the unintended consequences of user-generated content, and there are lessons to be learned here if you’re looking at UGC, whether in your own enterprise or for consumers in general. Similarly, there are perils in any customer-controlled environment. Bear with me, though, because this is long.
Massively multiplayer online games (MMOGs), and MMO roleplaying games (MMORPGs) in particular, all have distinct communities, but each such community is always full of players with conflicting interests. The development studio has to balance their own vision, as well as the sometimes-warring interests of different types of players, and the commercial needs of the game (whether it’s paid for in subscriptions, real-money trade, or other, there has to be revenue), in order to maximize long-term profit. Communities are particularly fragile, and widespread changes can lead to mass exodus, as Sony Online Entertainment discovered with Star Wars: Galaxies, where a thorough and expensive revamp instead caused more than a 50% drop in subscriptions. Players who depart are not individuals — they are part of a community of family, friends, and online acquaintances, and when key players leave, there’s a domino effect.
Enter NCsoft (SEO:036570), and one of its veteran properties, five-year-old City of Heroes. CoH is relatively small fry for NCsoft — it peaked at around 200,000 subscribers, and now has something in the 150,000 range, paying a base of $15/month in subscription fees. NCsoft’s Lineage and Lineage II, by contrast, each have about a million subscribers; for anyone that isn’t Blizzard and the juggernaut that is World of Warcraft, these are impressive numbers, but they’re down hugely from their all-time highs.
CoH currently enjoys a position as the only superhero-themed MMOG out there. However, Champions Online comes out this summer, designed by the same folks who originally created CoH, creating an imminent competitive threat. Paragon Studios (the studio within NCsoft that’s responsible for CoH) chose to do something smart — introduce user-generated content, allowing players to create their own missions (scenarios), complete with fully custom enemies to fight. (As an on-and-off CoH player with what I hope is a creative streak, UGC is deeply welcome feature, and lots of people are using it to do very entertaining things.)
As one would expect, players immediately went diligently to work to find ways to hyperoptimize UGC in order to maximize rewards for a given amount of play time. The game’s EULA specifies you’re not allowed to use exploits, but the difficulty created was this: What is an exploit, versus merely unintended levels of reward? There are methods in the game that generate very high rewards per unit time, for instance; UGC simply allowed players to generate optimal situations for themselves. The game’s programmers rapidly closed down some methods, but left other methods live for almost a full month. The hyper-efficient methods were well-known and broadly used by the player base, but the studio was essentially silent, with no communication to customers, other than a request for feedback.
Usually, in a virtual world, when there’s an exploit, the exploiters are limited to a handful of people; players normally know a bug when they see one, like the ability to duplicate a valuable object. This particular case is unusual because it affects a sizable percentage of the player base, and it’s unclear what is and is not an exploit.
Consequently, players have been shocked to see NCsoft announce that they’ve decided to react harshly, stating that players who have “abused” the reward system may lose the rewards they’ve gained, including losing access to the characters used. Since CoH is an MMORPG, characters may represent hundreds, even thousands, of hours of investment, so this is a serious threat. The real-world cash value of optimized characters is significant, too, although such sales and transfers are against the EULA.
It’s an extraordinary choice on NCsoft’s part. Other than the instructions not to “exploit” the system, as well as explicit rules forbidding players from creating exploitative UGC, there was never any warning to customers not to play UGC that might be exploitative, although CoH‘s parent studio publicly communicates with customers on a daily basis through the game’s forums. NCsoft has recently been pushing sales of a new boxed set for new players, as well, leading to the high likelihood of inadvertent “abuse” by new players who would not necessarily know that these were exceptional levels of reward for the time.
Losing access to rewards and characters essentially represents nullifying the time investment of players, and the removal of avenues from which to have fun (the character represents the ability to access content). Thus, impacted customers, most of whom subscribe month-to-month, have a very high likelihood of cancelling. This represents a potential direct revenue hit at a time when the game is likely extremely vulnerable to competition, and the aforementioned domino effect of subscriber loss is real and must be considered. Yet, to not do anything is a compromise of principle, and potentially creates a whack-a-mole effect whereby players find new gray areas of high-reward generation and widely use them to gain rewards, while developers try to patch these as quickly as possible. Moreover, because virtual worlds have internal economies, exceptionally fast rewards create imbalances, so they have an impact beyond individual players. (This does not include the impact to “gold farmers” and “power-leveling services”, who offer in-game rewards and powerful characters in exchange for real money, a practice which is against nearly every MMOG’s terms of service, but is nonetheless a significant and growing business. Ironically, making it easier for players to gain quick rewards on their own devalues such services.)
NCsoft is facing the prospect of significant subscriber bleed due to the forthcoming Champions Online, so a decision that increases the likelihood of cancellations is an extraordinarily bold move. It’s unusual for public companies to be willing to choose principle over revenue. Implementing harsh penalties based on clear guidelines, possibly with an automated warning system (i.e., if a player has gotten more than X widgets per Y time, alert him to it), may be advisable, but retroactive imposition of penalties on one’s customer base is another matter. Creating “traps” for bad apples disguised as paying customers is certainly reasonable. Punishing ordinary customers for having done something gray, and which your company has failed to even suggest is black, may be a quick ticket to having to offer unpleasantly complex explanations to your shareholders. Industry-watchers may find the outcome of this to be instructive.
So here are the broader lessons:
A couple of months ago, I wrote about scaling and friendly failure. The same principle that applies here: It’s not what the limits are. It’s how well you communicate them to your customers in advance of enforcing them. It applies whether you’re a gaming company, a cloud computing company, a network services provider, or an entirely non-tech company.
If you are providing an environment with user-generated content, expect that it will be abused, sometimes in subtle ways. Even in a corporate environment, there are potentials for abuse, particularly if the company gives employees goals or bonuses to work towards for completing UGC. Human nature being what it is, people optimize; in the work world, they’re careful not to optimize so much that they think they could get fired over it, but again, the boundaries are gray and hazy. Clear communication of what is and isn’t acceptable, in advance, is necessary.
One of the ongoing refrains of the analyst job is listening to clients gripe, day in and day out, about the things they don’t like about their vendors. Sometimes these things are niggling annoyances. Sometimes, though, these things are rage-inducing, or, in clients who tend to take everything calmly in stride, at least a distinct issue that materially impacts the service that they receive.
Sometimes these issues are recurring problems with a given vendor. I can tell you, for instance, that Vendor X has a process and organizational structure in place which essentially incentivizes its operations staff to kick requests from department to department without anyone being accountable for problems being resolved; unsurprisingly, this results in long resolution times for complex cross-functional issues, and frustrated customers. If you are with Vendor X, it’s something that you have to live with, since Vendor X’s internal politics do not permit fixing the core problem.
Sometimes, however, these issues are out of the ordinary, and would benefit from escalation. However, the majority of the time, the customer has generally not said anything to their provider about the issues they’re having — even if they’re so unhappy they’re planning to leave. Or if they’ve said something, they haven’t escalated into management. They don’t want to rock the boat, or disrupt the “relationship”. They’d rather suffer.
Since I have executive-level contacts at most of the service providers that our clients use, I usually offer to put such clients in touch with someone at their vendor who can see to it that real attention gets paid to the problem. Generally, unless their project is on the brink of failure, clients refuse that offer. Sometimes, they’ll permit me to raise the issue with the vendor, in a more anonymous fashion — i.e., something that doesn’t identify them personally, but which might provide just enough of a hint that the vendor can figure out who it is they ought to be helping.
I don’t get this. You are not dating your vendor. If you wait for them to bring you roses and chocolate, you are going to be disappointed. They will not read your mind, or recognize that you are quietly sulking and waiting for them to notice just how hurt you are and beg you to love them again. You are paying what is sometimes an egregious amount of money for services, and you deserve to get what you’re paying for.
To the vendors who wonder why they get anonymized passed-on complaints from analysts: It’s because analysts can be sort of like a combination of newspaper advice columnists, girl-gossip circles, and therapists. We can only do so much to coax clients into being honest with their vendors.
To the IT buyers out there: When you’re dealing with vendor frustrations, why do you seethe in silence, rather than complaining and escalating?
I’ve recently read Pete Blackshaw’s Satisfied Customers Tell Three Friends, Angry Customers Tell 3000, which is a well-written, methodical introduction to consumer-generated media (CGM, also known as UGC, user-generated content). I’d recommend the book to anyone who hasn’t read a book on the topic; if you’re social-media savvy, chances are you won’t learn much (if anything) new, but the anecdotes are entertaining and useful, and the structured approach provides good framework language.
Thus, trust, credibility, and authenticity in corporate engagement are very much on my mind, at a time when there’s a new (resurfaced) controversy regarding local-review site Yelp, which is being accused of manipulating user reviews to gain advertising revenues. Naturally, Yelp denies any extortion of local businesses.
As an analyst, I belong to an industry which is constantly being questioned about the credibility and authenticity of its commentary — the age-old question of whether it’s a “pay to play” business where vendor clients receive ratings and recommendations that are more favorable than those that non-clients get. I still find myself having to stress to clients and non-clients alike that Gartner opinion cannot be bought. It’s one of the genuinely great aspects of working here — the organizational commitment to integrity. This is not to say that there aren’t conflicts — a vendor client has more avenues with which to express their unhappiness with an analyst’s opinion, and attempt to influence it in a more positive direction. But in the end, we pride ourselves on serving our IT buyer clients with honest advice — which means that vendor dollars can’t be allowed to influence analyst opinion.
I imagine that for any organization which provides reviews and recommendations as part of its business, and which accepts money from the entities being rated, has problems with rogue salespeople who attempt to imply, or even outright state, that paying for services means more favorable positioning. So the question is, what’s the organization’s attitude, from the CEO down, towards these things? Is it a wink-wink nudge-nudge thing where the organization only pays lip service to neutrality, is it a don’t-ask don’t-tell thing where the organization is willing to turn a blind eye as long as it doesn’t cause obvious problems, or is the organization really dedicated to ensuring that dollars don’t alter anything?
Which of these categories does Yelp fall into? I’m a pretty engaged consumer — I read reviews on Yelp, and I write them from time to time. I’ve got a keen interest in knowing.
Do your processes help or hinder your employees’ ability to deliver great service to customers? When an employee makes an exception to keep a customer happy, is that rewarded or does the employee feel obliged to hide that from his manager? When you design a process, which is more important: Ensuring that nobody can be blamed for a mistake as long as they did what the process said they were supposed to do, or maximizing customer satisfaction? And when a process exception is made, do you have a methodical way to handle it?
Many companies have awesome, dedicated employees who want to do what’s best for the customer. And, confronted with the decision of whether to make a customer happy, or follow the letter of the process, most of them will end up opting for helping the customer. Many organizations, even the most rigidly bureaucratic ones, celebrate those above-and-beyond efforts.
But there’s an important difference in the way that companies handle these process exceptions. Some companies are good at recognizing that people will exercise autonomy, and that systems should be built to handle exceptions, and track why they were granted and what was done. Other companies like to pretend that exceptions don’t exist, so when employees go outside the allowed boundaries, they simply do stuff — the exception is never recorded, and nobody knows what was done or how or why, and if the issue is ever raised again, the account team turns over, or someone wonders why this particular customer has a weird config, nobody will have a clue. And ironically, it tends to be the companies with the most burdensome process — the ones not only most likely to need exceptions, but the ones obsessed with a paperwork trail for even the most trivial minutia — that lack the ability to systematically handle exceptions.
When you build systems, whether human or machine, do you figure out how you’re going to handle the things that will inevitably fall outside your careful design?